Why is financing a domain name not a thing?

Discussion in 'General Domain Discussion' started by gold2platinum, Apr 27, 2015.

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  1. gold2platinum

    gold2platinum Established Member

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    I've seen companies that offer financing to people when they use a domain as collateral, but why have I not seen companies that will buy a domain on your behalf and let you make payments?



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  2. hawkeye

    hawkeye Top Member PRO VIP ★★★★★★★★★★

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    We're all waiting for you to start one up! :)
     
  3. jamesosix

    jamesosix Established Member

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    they will. Its called a bank or a credit union or a loan company ;)
     
  4. Chris Wright

    Chris Wright NameOpps.com VIP

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    It's very risky. Can you imagine doing the same for someone?

    The domain market is quite inefficient compared to other markets.
    That makes it less liquid.
    Efficiency / liquidity create the stability that is needed for 3rd party financing.
    But the same market inefficiency also makes space for greater intermediation (domainers).
     
  5. gold2platinum

    gold2platinum Established Member

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    Bank: Hello, sir. How can I help you today.
    Me: Yes I would like a loan in the tens of thousands please.
    Bank: Buying a house?
    Me: No, I want a portfolio of domain names.
    Bank: Hahahahahahaha
     
  6. biggie

    biggie Top Member VIP ★★★★★★★★★★

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    you can buy a domain from me and i'll let you make payments

    :)
     
  7. jamesosix

    jamesosix Established Member

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    Bank wouldnt refuse it aslong as they can see on paper you have the means to pay the loan back.

    You do know banks lend for more than just houses right?
     
  8. gold2platinum

    gold2platinum Established Member

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    Yea, I know but I was just having fun with that hypothetical situation.

    But what if you wanted to purchase a LLL.com for $xx,xxx. Who has the assets to back up such a loan?
     
  9. jamesosix

    jamesosix Established Member

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    I know :)

    But essentially whoever fronts $xx,xxx is going to want to see some way of that being repaid. Whether its a bank, mum & dad, best mate etc..

    The truth is, no company in the world would front a $xx,xxx figure purchase, without some evidence they will not lose that money.
     
    Last edited: Apr 27, 2015
  10. mhdoc

    mhdoc Top Member VIP ★★★★★★★★★★

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    Having spent several years in the sub-prime auto loan industry I see two immediate problems.

    1. I think it would be extremely hard to find someone in the lending industry willing to make large loans secured by a domain name. They would have to know enough to be confident of the value, they would have to convince their associates that was the case, they would worry about potential losses due to fraud & hacking. Anyone willing to lend in this environment will expect to be paid a yield that rewards their perceived risk.

    2. Most of the domainers looking this kind of loan will have a MUCH lower estimate of the risks. They probably also are only familiar with consumer lending and don't realize how heavily subsidized house loans and card loans are.

    The result is a huge gap between loan terms borrowers would find reasonable and those a lender would insist on.

    For example, if your credit is trashed and you buy need to buy a car from "Joe, The Walking Man's Friend". you will be looking at 20% cash down and a loan at 32% APR for 36 months. Joe will immediately sell that contract to a captive finance company for 75% of the face amount. The finance company will assume about 25% of the loans will default at some point.

    Most will do better talking to dad, grandma, etc. :)
     
  11. forge

    forge Same Dose VIP

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    Could I get the phone number for your dad and grandma?

    :xf.grin:
     
  12. gold2platinum

    gold2platinum Established Member

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    All valid points as to why a lending company or bank would not be the ideal lender.

    This is why there needs to be a company who is well versed in the domain industry to make this happen.

    The company could require a certain percentage of total purchase price up front before they put the money up. Also, they hold the domain in their portfolio and park it and collect all revenue until the buyer has paid in full.
     
  13. Kate

    Kate Thinking inside the Box™ VIP ★★★★★★★★★★

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    The problem is that domain names are not liquid assets.
    Cars or homes can be repossessed and resold at short notice at a predictable price.
    With domain names: more difficult.

    PS: I think you can do escrow with monthly installments, so the payment can effectively be spread across a certain number of months.
     
  14. equity78

    equity78 Top Member TLDInvestors.com TheDomains Staff PRO Business Account VIP ★★★★★★★★★★

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    In the domain business some sellers will provide seller financing, there are some who lease and some who let people pay as they go, like layaway. Miss a payment or two and they keep the domain and the payments.

    What is key is the legal agreement that the buyer and seller agree to.

    There is DomainCapital.com

    Domain Capital is the first and only financial services company to offer financing to businesses based on the inherent and recognized value of premium domain names. Our vision is to innovate exciting new financial products and services designed to enable entrepreneurs to exploit new business models.

    Domain Capital's services are designed for:

    1. Existing domain name owners who need a ready source of asset-based, working capital.
    2. Prospective domain name owners who wish to acquire premium domain names for their own use or to trade in the domain name aftermarket: An important source of leveraged capital, reduced time to market, a partner with an understanding of the Internet.
    3. Internet registry and transaction brokers: Domain Capital shortens the sales cycle and provides a potential source of high margin revenue, while it provides an important, value-added service to their clients.
    http://domaincapital.com/
     
  15. Lendvo Domain Financing

    Lendvo Domain Financing New Member

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    Domain Financing is a thing! We offer domain financing for both buyers and sellers. Please get in touch for domain financing questions or to see if you qualify. Lendvo.com
     

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